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COREL AGREES TO SETTLE CLASS ACTION FOR $7M PHILADELPHIA — Corel Corp., a Canadian software company whose products include WordPerfect, has agreed to pay $7 million to settle a class action shareholders’ suit that alleged its stock price plunged in late 1999 and early 2000 when investors learned the truth about its financial health. In court papers filed last week, the lead plaintiffs’ attorneys urged U.S. District Judge Anita Brody to grant final approval of the settlement. In a separate brief, the plaintiffs’ team asked Brody to award them fees equal to one-third of the settlement fund, or more than $2.3 million. The suit alleged that Corel hid the truth about its financial problems for several months — all the while misleading investors with positive statements. Historically, Corel had operated in the Windows market, generating all of its revenue from the sale of software for use on the Microsoft Windows operating system, the suit said. But in 1999, the suit said, Corel announced that it was destined to become a major force in developing products for the new Linux operating system. Plaintiffs’ lawyers said Corel led investors to believe that its Windows business was a “cash cow” that would support its entry into the Linux marketplace. The positive comments led investors to expect that Corel would report profits for the final quarter of 1999, the suit said. But “in a dramatic about-face,” the suit said, Corel announced in late 1999 that it would be posting a loss for the quarter that had ended the month before. — The Legal Intelligencer JUDGE TELLS LAWYER HE NEEDS TO TAKE CLASSES NEWARK, N.J. — A lawyer’s attempt to save a time-barred malpractice suit by wrapping it up as a federal RICO and civil rights case has drawn an unorthodox sanction: Rather than dock the lawyer for fees, the judge ordered him to take courses in federal practice and procedure, professionalism and legal ethics. U.S. District Court Judge Stephen Orlofsky noted in his Aug. 15 ruling that he imposed sanctions only after giving the lawyer written notice of a potential violation of Federal Rule of Civil Procedure 11 (b)(2), which requires lawyers to ascertain that their claims are “well-grounded in fact and law.” Frank Branella, a Marlton, N.J., solo practitioner, had botched a state-court medical malpractice suit on behalf of Enez Balthazar of Ocean City, N.J., whose ureter was severed during a hysterectomy. Atlantic County Superior Court Judge Carol Higbee dismissed the suit in May 2001 for failure to submit a timely affidavit of merit. In 2002, Branella filed the federal suit, Balthazar v. Atlantic City Medical Center, 02-1136, charging the hospital and three doctors with covering up their negligence, falsifying records and conspiring to deny the plaintiff’s rights in violation of federal and state RICO laws. Orlofsky spotted the ploy. “Balthazar is dissatisfied with the dismissal of her state court claims. As a result of this dissatisfaction, she has simply recast her state law claims as violations of federal civil RICO and Sec. 1985,” he wrote. Branella declines to comment on the case other than to say he will appeal the dismissal of the district court case and the imposition of sanctions. — The New Jersey Law Journal

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